Read the above article about Federal Reserve bond purchases. Describe what effect and how these purchases would affect the supply of money in the economy. Describe whether this is a defensive or dynamic open market operation. The article mentions that these purchases are not meant to be stimulus affecting the broader economy. In your opinion is that correct or not? The article mentions that one reason for the purchases is due to corporate tax payments. How would tax payments by corporations affect the banking system and the money supply? How does the Fed’s action affect the market for reserves?
Your response must be 300 to 500 words. File must be uploaded as an MS Word document or pdf file by 5 PM on Friday March 6. Please feel free to use information from class or other sources (Google searches and reading information online, reading other articles, etc.). Just do not copy someone else’s writing or ideas verbatim, including your fellow students. That is plagiarism and will result in a submission to SJA. The assignment is 5 points total.
5 points: Uploaded before 5 PM on due date. Meets word count requirement and correctly uses once course concept.
3 points: Uploaded before 5 PM on due date. Meets word count requirement and uses a concept from class but not correctly (e.g. misunderstands a definition or model, etc.).
3 points: Uploaded late on the due date but before 5:30 PM. Meets word count requirement and correctly uses once course concept.
0 points: Everything else.